China Bans Enforcement of US Sanctions on 5 'Teapot' Oil Refineries
Zsombor Peter
China has banned the recognition and enforcement of U.S. sanctions against five oil refineries accused of buying Iranian oil. The Ministry of Commerce called the penalties a violation of international law. The order targets facilities including Hengli Petrochemical and four teapot refineries.
China has issued an injunction blocking U.S. sanctions targeting five oil refineries accused of purchasing oil from Iran. The move follows the U.S. Treasury Department’s imposition of penalties late last month, which bar these companies from accessing the U.S. financial system and seek to penalize anyone trading with them.
In a statement on Saturday, China’s Ministry of Commerce said the sanctions “improperly restrict” business dealings between Chinese firms and third countries, “violating international law and the basic norms governing international relations.” It issued an “injunction” stipulating that the penalties “will not be recognized, enforced, or complied with” in order to “protect national sovereignty, security, and development interests.”
“The Chinese government has always opposed unilateral sanctions that lack authorization from the United Nations and international legal basis,” the ministry added. The injunction targets U.S. measures against Hengli Petrochemical (Dalian) Refinery and four other “teapot” refineries: Shandong Jincheng Petrochemical Group, Hebei Xinhai Chemical Group, Shouguang Luqing Petrochemical, and Shandong Shengxing Chemical.
When announcing the sanctions on April 24, the U.S. Treasury called Hengli “one of Tehran’s most valuable customers,” alleging the firm generated hundreds of millions of dollars in revenue for Iran’s military through crude purchases. The Trump administration had previously imposed sanctions on the other four refineries named in the Commerce Ministry statement, along with additional facilities, last year.
China sources more than half of its oil from the Middle East, a large portion originating from Iran. According to commodity data firm Kpler, China purchased over 80% of Iranian oil shipped in 2025. China’s “teapot” refineries are independently operated and typically smaller than facilities run by state-owned oil conglomerates like Sinopec.
These plants, which play a key role in securing China’s oil supply, process steeply discounted crude sold by sanctioned nations such as Iran, Russia, and Venezuela. Teapot refineries account for a quarter of China’s refining capacity, operate on thin and sometimes negative margins, and have recently faced pressure from weak domestic demand. U.S. sanctions further hinder these refineries, including difficulties in selling refined products with accurate origin labeling.
